Browse Forums Home Finance Re: Capital gains tax 4Jun 06, 2010 10:40 pm VICTORY 1800, EN-SUITE, DOUBLE GARAGE, FAMILY ROOM AND ALFRESCO Land Settled: 20 July 2010 Site Scrap: 30 August 2010 Slab Pour: 20 September 2010 Frame Complete: 23 September 2010 Fascia and Gutters: 28 September 2010 Roof Complete: 06 October 2010 Lock-up complete: 28 October 2010 Plaster complete: 29 October 2010 Fix-out complete: 22 Nov 2010 PCI 7 FEBRUARY 2011 Re: Capital gains tax 9Jun 11, 2010 9:12 am VICTORY 1800, EN-SUITE, DOUBLE GARAGE, FAMILY ROOM AND ALFRESCO Land Settled: 20 July 2010 Site Scrap: 30 August 2010 Slab Pour: 20 September 2010 Frame Complete: 23 September 2010 Fascia and Gutters: 28 September 2010 Roof Complete: 06 October 2010 Lock-up complete: 28 October 2010 Plaster complete: 29 October 2010 Fix-out complete: 22 Nov 2010 PCI 7 FEBRUARY 2011 Re: Capital gains tax 12Jun 27, 2010 1:39 pm Hi, My brother and i purchased an investment property about 2.5 years ago and has been rented out the whole time. We have now decided to renovate and sell to make a nice profit, meaning we will be hit with CGT tax. To avoid CGT or to pay minimal, when the tenants move out which is in a couple of weeks, can i get a market evaulation from a real estate agent and therefore the cost base is obviously what we paid for it and the sale price will be the market evaluation. We are going to renovate and live in it and make it our primary place of residence and sell in about 2 yrs. To avoid such a heavty CG tax is it possible to use the market evalution as our disposal price??? If not what could be a strategy to pay minimal CG other than holding it for a longer period of time??? Thanks you. Re: Capital gains tax 13Jun 27, 2010 3:42 pm You are complicating the issues... If you live in it after the rental period then, it IS your PPR (principle place of residence) Sale of a PPR is not a trigger for CGT. I am sure if this is not correct I will go to gaol Hmm not bad, 3 square meals a day and a roof over my head... Helyn I figure will have some more details for us.. or another H1 member. Where you are coming from is where you are going to... Re: Capital gains tax 14Jun 27, 2010 4:27 pm If you live in it after the rental period then, it IS your PPR (principle place of residence) Sale of a PPR is not a trigger for CGT. [quote="onc_artisan"]You are complicating the issues... It has not been a principle place of residence for the whole time of ownership therefore i think it does trigger CG and it would have to be apportioned based on rented out time over the whole time of ownership. Therefore my question when we renovate it will add a lot of value to the house and CG will have to be apportioned over the time it has been rented out. To keep CG to a minimal i was thinking you could get an evalution and that would be the sale price as the renovation will add at least 150k to the selling price. Re: Capital gains tax 15Jun 27, 2010 4:34 pm kek AJW I have a question on a similar vane. Brought my house in 2000, lived in it until 2007 at which point I moved O/S on a 4 year contract so rented it out. Will return in early 2011 however the missus is talking about up sizing. In this case do we get hit with capital gains tax? If so is it based on the purchase price in 2000 or some calculated value circa 2007? Also are there any special provisions for situations where we were renting out what would have otherwise been our primary property? There is an exemption - you can live elsewhere for up to six years, then as long as you move back in, you won't cop GCT when you later sell. If you don't move back in before you sell, the exemption won't apply. Go read the ATO's website for all the info - far better than "asking the internet". From http://www.ato.gov.au/individuals/content.asp?doc=/content/36887.htm: Quote: If you use the dwelling to produce income – for example, you rent it out or it is available for rent – you can choose to treat it as your main residence for up to six years after you cease living in it. If you're still unsure, ring the ATO and ask them - they can give you free advice plus send you whatever publications there are on the subject. Or you can pay for advice from a registered tax agent. Mistakes can be expensive if you're ever audited.... Where you are coming from is where you are going to... Re: Capital gains tax 16Jun 27, 2010 4:44 pm You picked up a good point about the exemption, Onc, except that you must have lived there in the first place, immediately after you purchased the property (or as soon as practicable - e.g. if it required work to make it habitable). julz05, you can probably add on the renovation expenses, to increase your cost base, but there is no way you can get out of paying some CGT on any profit you make. There is info about valuations and when they apply on the ATO's website. I'll see what I can find.... Re: Capital gains tax 17Jun 27, 2010 4:51 pm Oh dear ....back to pushing mud Where you are coming from is where you are going to... Re: Capital gains tax 18Jun 27, 2010 5:01 pm Onc, if I ever have a concrete question, I'll come and ask you. Tax or accounting ....maybe not. I'm pretty good on bookkeeping and basic income tax, and I'm a whiz on GST, but I still pay a tax agent to do my return every year. I sold shares this year and there's no way I'm even trying to calculate the capital gain on those! I didn't find a definitive answer, but there are free ATO seminars for rental property owners coming up in the next few months if you don't want to pay for advice.... I'm sure you can ask questions.... http://www.ato.gov.au/individuals/content.asp?doc=/content/00154616.htm&pc=001/002/002/013/003&mnu=&mfp=&st=&cy=1 Re: Capital gains tax 19Jun 28, 2010 12:22 am I'm not even going to attempt to wade into the debate of CGT, but will say this: Don't confuse a sales rep/real estate agent with a Licensed Valuer. It is made very clear in real estate training and codes of conduct (in WA at least) that you must not claim to be giving a valuation. Real estate agents give market opinions/appraisals based on comparable properties, which banks and the ATO don't necessarily take a lot of notice of, hence banks sending independent licensed valuers before giving you a mortgage. Just for the record, same goes for finance and insurance. They're regulated and licensed industries. Oceanic with Nautilus upgrades. Handover 8 September 2010 Re: Capital gains tax 20Jun 28, 2010 1:15 am in my language I would say "ndaita mutete" meaning this issue is too big for me. It's interesting though. VICTORY 1800, EN-SUITE, DOUBLE GARAGE, FAMILY ROOM AND ALFRESCO Land Settled: 20 July 2010 Site Scrap: 30 August 2010 Slab Pour: 20 September 2010 Frame Complete: 23 September 2010 Fascia and Gutters: 28 September 2010 Roof Complete: 06 October 2010 Lock-up complete: 28 October 2010 Plaster complete: 29 October 2010 Fix-out complete: 22 Nov 2010 PCI 7 FEBRUARY 2011 the exemption applies only to your principal place of residence - so you must live in it. The 200 days is continuous. You also have to apply for the exemption. 2 13402 If it's your primary residence then there is no tax deductions to be made. 4 125512 |